Fortescue Metals Group has emerged as a surprise, potential rival bidder for Atlas Iron after revealing it had amassed a 19.9 per cent stake in the company for $55.7 million.

The Andrew Forrest-controlled miner announced this morning it would not support the proposed all-scrip $300 million takeover of Atlas by Chris Ellison’s Mineral Resources on its current terms but would reserve the right to do so.

Fortescue said it had agreed to acquire 15 per cent Atlas Iron at 4¢ a share, well above the 3.2¢-a-share MinRes is offering in scrip, based on its one-for-571 a share offer.

“In addition, Fortescue has an economic interest through a cash settled swap relating to notional shares equivalent to approximately 4.9 per cent of Atlas Iron’s ordinary shares,” the company said in a statement.

“As a result, Fortescue has an aggregate physical and economic interest in 19.9 per cent of Atlas Iron’s ordinary shares.”

The stake represents the maximum a company can hold in an entity without formally announcing a takeover bid.

However, the holding effectively represents a blocking stake, with many of Atlas Iron’s approximately 24,000 small shareholders being bitterly opposed to the MinRes offer.

Should Fortescue announce a rival bid for Atlas, it will pit two of Perth richest and hard-headed mining entrepreneurs against one another in Mr Forrest and Mr Ellison.

At stake is one billion tonnes of iron ore resources across several landholdings in the Pilbara, which are also prospective for lithium, as well as a coveted 13 million tonne-a-year port capacity at Utah Point.

However it is unclear whether Fortescue will be able to secure access to Utah Point, given its major status and its existing berthing facilities at Port Hedland.

The government has in the past stated Utah Point is reserved for smaller miners, who don’t have access to their own port facilities.